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Your Bottom Line

News/Business. Christine Romans. Financial advice. New.

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00:30:00

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U.s. 17, Washington 11, China 11, Us 6, Greece 4, Bjorn 3, Garth 3, Usaa 3, Europe 3, Google 2, Ken Rogoff 2, Ken 2, Underarm 2, Pentagon 2, Bing 2, Barbara 2, Chantix 2, Jean 2, America 2, Christine 1,
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  CNN    Your Bottom Line    News/Business. Christine  
   Romans. Financial advice. New.  

    February 23, 2013
    6:30 - 7:00am PST  

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getting another dose of winter weather. some areas could see up to a foot of snow. if you'll be on the road or in the air, keep an eye on possible canc cancellations or closures. a lot of cities in the northeast will escape the worst of the snow, but it could still cause trouble. washington state says the public is in no immediate danger although nuclear waste is leaking there at its hanford facility. after one tank was found leaking five more tanks have been found leaking. the governor says there is no immediate health risk but does acknowledge it's disturbing. not even microsoft is safe from hackers, infecting a small amount of its computers with malicious software. it's investigating and says there's no evidence that customer data was stolen. hackers recently attacked apple and facebook. police are on an intense manhunt for the occupants of a range rover involved in a las vegas shooting. shots fired from that car killed
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the driver of a maserati, which then crashed into a taxi. the taxi driver and his occupant were both killed. it caused a major piem pooilup on the las vegas trip. there were three other people inju injured. nevada has legalized online interstate gamble iing. it pushed through a bill with joint committees in both houses of the state legislature in less than four hours. governor sandoval signed the measure today -- thursday rather. and new jersey's governor chris christie says he may sign a similar measure for his state next week. gay priests, blackmail and corruption at the vatican. italian newspaper publishes a bombshell story days before catholic leaders choose a new pope. we'll have the latest coming up in 30 minutes for now. thanks for starting your morning with us. i'll see you at the top of the hour. "your bottom line" starts right now.
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thanks. see you at the top of the hour. we're not in a recession. for many of you, it sure might feel like one. good morning, everyone. i'm christine romans. for a moment there it felt like things were turning around, stock market near all-time highs, housing market recovering and the economy adding jobs every month. now relief may have given way to a little bit of worry. here's why. it's starting to feel like a recession again, especially if you're living paycheck to paycheck, gas prices up nearly 50 cents in the past month. the fastest run-up, you're bringing homeless money, thanks to the expiration of the tax cut. you're getting about 60 bucks less every month. rents are rising, up 12 quarters in a row now. unemployment is still too high. if you were counting on an early tax refupd you have had to wait. because of the fiscal cliff fiasco, the irs did not start
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issuing refund checks until january 30th. a stretched consumer, a consumer who has no choice but to cut back. big companies you work for say this is already happening. this week, walmart, the proxy for the american consumer says february sales were slow. why? it blamed gas prices, the end of the payroll tax holiday and those delayed tax refunds. that's what we know. washington to the rescue? of course not. on friday comes austerity, services will be curtailed, jobs will be lost. europe's experience could prove a valuable warning to washington. 17-nation eurozone is in a de deepening recession. in greece, thousands took to the streets to protest austerity measures where unemployment is in a shocking, shocking 17%. international monetary fund and
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economic crisis expert, ken, should we be taking very seriously the sequester and what that will do in the near term to the u.s. economy? >> the sequester is not just a cut back, but a very crude cut back, sort of just chop one finger off at every hand instead of letting somebody go. i think it was designed that way because the idea was this will force us to do something. but now they haven't. >> i'm starting to hear people in washington say, look, this is going to force some efficiencies in these agencies. they've had budgets that have been getting bigger and bigger for years, stimulus thrown into all different kind of safety net fund funds. maybe this is just tough medicine. >> it might force efficiencies into some agencies, though they really weren't planning for it, so they're having to do it pretty hectically. some agencies you don't want to cut. across the board cuts are a very crude way to run policy. do you want to cut your research and development, medical care, projects where you promised to pay and may end up losing a lot
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of money? the problem is it's so crude. they said, okay, this won't happen. we all know we won't do this. >> we all agree there is no way to run a country. >> yes. >> no way to run a checkbook. terri savidge writes a column. the national retail federation says nearly three-quarters of those polled are cutting back because of tax changes this year. this is a two-speed recovery, right? recovery for people with savings and a job and this other recovery for people who aren't on solid footing in the job front or in savings. is the paycheck to paycheck crowd already in recession territory? >> i think it's wrong to label it. a lot of government spending isn't going to be cut, social security, medicare. they're exempt. when you take a look at business, i heard on cnn the chairman of marriott international saying we're lowering our expectations, business won't travel as much. every family will be impacted.
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every family has already been impacted to some extent. as you pointed out, when businesses cut back, that impacts their suppliers, it impacts their workers and there is no doubt that the combination -- now, look, let's put the numbers in perspective. we took $110 billion in tax increases. this is $85 billion in tax cuts. right now we're focused on the immediate impact. u.s. economy is strong. it's been trying to grow for two years, despite what comes out of washington. and the real issue beyond this immediate impact is what happens to america so we don't get to be like greece, so that the kind of austerity that greece had to have, which really destroys the fabric of society, doesn't happen here? are we better dealing with it now? should everybody, the government and consumers at all levels take a bit of a cutback now to avoid that kind of draconian cuts they've had in europe? >> that's what i hear a lot, ken. the reason you have to do -- maybe not a sequester but the reason you have to have budget cutting now, even in an economy
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that's not on solid footing is because this is preventing us from being like greece. the lesson is not look at europe and being afraid of austerity in the u.s. the lesson is you better do austerity smart now in the u.s. it's like the chicken and the egg. >> austerity is smart but this isn't. policy not in a sensible way. you want to spend more things on infrastructure, education. there are things you want to cut back. the problem here is that it's just there's nobody home making the policies. >> that's what's so frustrating. we'll continue this conversation. forced government spending cuts are set to take effect this friday. be prepared. i'll show you who specifically will be hit hardest. all stations come over to mission a for a final go.
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forced spending cuts created during the 2011 debt ceiling debacle. it was a worst case scenario that was designed to be so bad lawmakers would be forced to make a budget deal to prevent it. but now it looks like the most vulnerable in our society will be paying the price for washington's inaction. 70,000 children from lower income families will lose their spots in head start programs, putting more than 14,000 teaching and staff jobs at risk. cuts to mental health programs mean almost 400,000 seriously mentally ill people would go untreated. and more than 100,000 people would be thrown out of emergency housing and back on to the streets. 3.8 million americans on unemployment would see their benefits fall by 9.4%. that's about $400 less they'll get through the end of the year. everyone, though, will feel this one way or another. while washington, washington plays a blame game. >> the bottom line is very simple. the republicans have proposed devastating cuts. >> washington democrats have gotten used to republicans
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bailing them out of their own lack of responsibility. >> senior writer at cnn money. they're going like this, each pointing at the other. and we're stuck here in the middle, trying to figure out who is going to get hurt first and hardest. some of these tough decisions are not going to get made. there are some who may argue, jean, that the scenario is not that bad and it's necessary. these cuts are going to hurt the most vulnerable. how do these cuts translate to hurting the economy nor generally, jean? >> the congressional budget office estimates for this calendar year we're probably going to lose six percentage points of economic growth. it's not going to put us in recession. on top of the tax increases, we're looking at 1.5% points of growth being curbed. it's economic growth we can't really afford to just forfeit for a set of cuts that most people say are pretty bad pol y policy. it helps deficits but doesn't really help us with the debt problem. that's where we're at.
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>> and, you know, it's been the most predictable crisis, you kn know. of the last few years. i want to bring in ken rogoff and teri savage back into the conversation. you say the impact of these cuts are being overdrama tied. explain. >> what we're doing is creating a drama to cover up for the fact that congress has totally abdicated responsibility. it's like the mother shouting i'm going to give you the count of three to come down, one, two, 2 1/2. come down here. this is really important. i'm start over. one, two. this is going to go on all spring. it's not just the sequester. then the president brings his budget to congress. we haven't had a real budget in four years. then the republicans have to bring their budget at the end of march. if we don't have a budget we'll have the threat of shutdown. then they'll pass a continuing resolution. then everybody goes on spring break ins with an. by the time they come back, the 7th of april, we're facing tax
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day where we will continue to pay and they will maybe or maybe not get paid if they can't come together with some kind of a deal. so, this is a drama that i think the american public is getting tired of it. >> i am certainly tired of it. i love your analogy with the children. ken rogoff, i have to say, comparing members of congress to children who aren't listening is a very, very good analogy. it is serious. i think that some do overplay the drama or play up what is legitimate drama because, you know, they want to shine a light on this. we're talking about labs that won't be funded, research that won't get funded. won't happen day one maybe but as the days wear on, this will have a real effect on a lot of things that we take for granted that are working in the economy. >> to put a positive spin on it, and it's hard. it's a vaccination. if we just keep spending and spending, eventually the market forces it on us. and it's much more unpleasant. it's sort of an artificial crisis to prevent a real one.
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but at the end of the day, they don't agree on where to go. and how much are we going to cut spending. >> there's no pressure from the market. there's no pressure at all right now from the market. interest rates are so low, it's incredible. >> i'll tell you one thing. that's not necessarily a sign that nothing will ever happen. there are many cases where things roll along for a long time and the market doesn't see it. the thing is that the horizon is not a year. it's more like five years, ten years, 15 years. it's so hard they're not even going to be in office necessarily. some of the people in congress are in office forever, i suppose. that's what's hard about it. the real problem, they don't agree on how to manage it. they create this artificial crisis. >> if you want to know when a lot of what's happening in all of this, you have to read jeanne sahardi at cnn.com. you're looking at what government agencies are saying, what the budget experts are saying. there are people in washington trying to figure out how to
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spend money differently starting in one week. >> right. this morning, he pointed out we thought this would happen january 2nd. agencies were preparing for that. then it got postponed for two months. now it may happen, there's still a chance in the next week that congress does an 11:00 pm deal that says we'll cancel the sequester, postpone it for a couple of months. that's yet more planning. or the cuts go into effect march 1 but don't really happen until april but somewhere between march 1 and march 27 where they have to pass more funding for the rest of the fiscal year, they come up with a deal to replace the sequester. agencies are spending time, money and people planning for something that everybody says is bad policy. and they've had to do it in three different versions. it defies logic. >> it defies logic. you have a show. today on cnn's it defies logic -- thank you so much, ren
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rogoff, jeanne sahadi and terri savage. this building is getting a lot of attention. what's going on inside. it's a serious threat to our safety and security in america under attack every single day. and you end up choosing google, you get an xbox. i'll bet you the xbox, you bet me your son. well let's look up what you need. okay, i would do the left. yeah? what?! i am a daddy! bing wins it! bing won. bing did win. people prefer bing over google for the web's top searches. don't believe it? go to bingiton.com and see what you're missing.
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just about every single day in this country, the u.s. is under attack. repeated attack. cyber attack. it's government agencies. it's companies, financial institutions, universities. and this cyber espionage is working. this week a cyber security firm pinpointed a specific building in shanghai, china where they say hundreds of hacking
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operations took place to target computer networks at large companies, government agencies here in the u.s. and other countries around the world. and the report says the operations from that building, backed by the chinese military. when a cnn news crew drove by to investigate, security officials gave chase. >> keep driving. drive away. drive away. drive away. >> drive away! >> later confiscating some of the tape in their possession. officials in china strongly denying any of these claims. i will be very clear, the chinese always deny claims of hacking, cyber espionage, any kinds of military espionage. what's more, they accuse the u.s. of hacking into hundreds of computer networks in china. experts here in the u.s. have a tough time putting a number on how much damages are caused by these as much as $100 billion or more.
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intellectual property one of the most serious losses. industrial secrets that may have taken decades to assemble here are stolen within days by advanced hacking networks said to be emanating from china. barbara starr a cnn pentagon correspondent, chris johnson is senior adviser at the center for strategic international studies. he was a former senior china analyst at the cia. chris, let me start with you. the ceo of namdia said that they had had enough. >> we felt that tolerance in the private sector, that it's just shrinking. people are sick and frustrated with how much i.p. we've lost to chinese hackers. we felt it was just a natural timing. >> chris, sounds like u.s. corporations have had enough. >> yes, i think that's definitely true. i mean, what's telling about the report that has just come out is the pervasiveness of this espionage by the chinese. and especially the role of the chinese military in economic espionage. you know, it's presumed, of course, that an opposition
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force, military force might enghaj probgauge in probes of national security information, looking for national security information. this economic espionage by the chinese military is a stark revelation, and it demonstrates that it's the entire force of the chinese government that is involved in this process. >> barbara, is there a cyberwar between the u.s. and china? if so, what are the pentagon's rules of engagement in such a war? >> i think absolutely. the answer is yes, i think it goes far beyond espionage. and it is war. it is war in this century. the pentagon, the obama administration actually trying to cope with that very question, christine. if you call this a war, what are the battlefield rules? if they attack us, if they try and get into u.s. banking systems, what are the rules for the u.s. to retaliate? would the u.s.? a battlefield situation try and take down another country's economic infrastructure, possibly having the impact of denying water, power, electricity to a population and a country we're at war with?
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these are the fundamental questions the pentagon is trying to cope with. for now, the obama administration has a new spiesh poli -- new cyberpolicy where they're trying to classify more information about the threat with u.s. business and industry so that the u.s. infrastructure has a better idea of what's going on. >> this mandate report doesn't just come out of the ether. we have had years -- barbara, you've been covering it, chris, you, too. years of reports of chinese lasers blinding satellites that are orbiting could essentially shut down the american financial system. right? we've had all kinds of reports of espionage for fighter jets, to keep nuclear subs quiet. things that will matter to our children, our economic security. it is not an exaggeration at all. chris, how concert sudden this effort, this -- concerted is this effort, this industrial complex in china to get as much control as they can over the
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american system? >> it's a pervasive problem. i think it's important to recognize that while there have been these allegations of chinese probing of u.s. critical infrastructure and so on, it's not exactly clear at this stage what the intent might be. that said, i think with the chinese military in particular, there is a perception, n china, especially among the military, that u.s. has a full-up cyber war plan to conduct against china. you cannot convince them that this mentality is somehow wrong. there is a sense in china that they should do the same thing. i think that's why we're seeing a lot of this activity. in terms of pervasiveness, it has been going on for many years. when china feels a persistent gap in responsibilities, this is an area to improve. >> nice to see you. watch this space. this is something that will ton come up, i'm sure. washington isn't coming to save you, but it is possible to make it on your own. coming up, i'll spruce you to someone who's working six jobs at once and loving every minute of it. what's next?
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ameriprise financial. more within reach. working multiple jobs as a college student isn't unusual. working six different jobs in your 50s, that's business as usual for shar main decosta. she says her career choices are a by product of the recession. while she's working hard, she says she's making this economy work for her. sharmane is a pastor, office manager, host for air b&b -- >> when they travel, people appreciate someplace clean. >> english language tutor, professor -- ♪ >> and a singer/songwriter. >>